The Sunday morning news. [volume] (Jersey City [N.J.]) 1886-1891, 1887-03-20
B. & L. ASSOCIATIONS.
HOW A MAN MAY BUILD HIS $1,000
HOUSE FOE $500.


in The Form of Inrerest-Vast sums
Invested ON Mortgage. and Not "a Fore
closure suit Necessary Yet.
The recent discussion on the Hudspeth
Building and Loan Association bill and the
artic presented in these columns last
Sunday morning on the general subject of
Building and Loau ASSOCIATIONS have served
to stimulate inquiry among those who are
are not members of them, as to what they
are and waat their design. Indeed, many
persons directly associated with them do
not thoroughly understand the benefits to
be derived rom connection with them. A
SUNDAY MORNING News reporter, who was
instr csed to make inquiry into the subject,
sought Alderman Jewkes at his home on the
Hill yes rday. The Alderman is regarded,
as he says himself, as the grandfather of
the system in these parts. Everybody who
was sought for information referred the re-
porter to him.
Building and Loan Associations are of
English origin. They have fourished for
. century or more in the United Kingdom
across the seas; and it is probably because
Mr.. Jewkes is an Englishman that he hap
ened to know enough of them to give
Them a start here. They have grown with
wonderful rapidity in this State especially
in this and Camden counties. Bergen, No.
/. was the uarent association, in this county
at least. Since she was established by
Frank Cole and Jewkes and Lawyer Nc
Burney, four years ago, twenty-five other
associations have been formed, and Mr..
Jewkes estimated that altogether they have
q million and half of dollars invested IN
mortgage securities i'll this city. Bergen,
No 1, alone has upwards of $150,000 of its
loaned moneys drawing interest, and pay
il rich profits to the shareholders.
When q new Building and Loan Associa-
non is projected. a certain number of gen.
tIemen get together, and fix the number of
shares TO be issued by it. Except in few
isolated cases, the number fixed hereabouts
is $500. A man may take as many shares
as he pleases. He is to pay 20 ceats per
week on each share, so that the steady
weekly income OF an association from its
shares is 1925; in month it is $500; in
three months $500. On each of these
shares he is entitled to borrow $200-with
some conditions that will be stated here
after. He is not expected to repay the
money in lump, but is to 60 on paying
his Is cent weekly payment GA each OF his
shares till the share has earned $780, Then
his obligation as o borrower is wiped QUIT
and he surrenders his shares for the loan.
When each of the $500 shares has eapfied
$500, the Building and Loan Association
issuing them is defunct, accordingto what
is known as the Terminal plan. 1.-THE man
who understands simple multiplication can
I.oXx = 4 (,
would take borrower something over six
teen years.fo pay the full $500 for his
share: Ibut the Association is earning
money, he shares in the profits, and care
full calculators figure that his share will
have earned the 5000 inside of eleven
years.
OF course necessary restrictions are
thrown ABOUND the loaning of money. It
is loaned In the early stages only for build
ing purposes, and the man who borrows
must have some real estate to offer as
fer the loan. If he wants to build
his house, he must own the lot on which 1t
is to stand. A Committee of Appraisers
determines whether the lot is fair secruity
for the loan. A man with ten shares would
not be permitted to borrow $2,00O-that is
$500 on each share-with $50 lot for in
stance to build on. And even after he has
borrowed, the money is given to him only
in instruments, asahis building progresses.
Nor can every stakeholder borrow when he
pleasss on his shares. The money accum-
lates, as has been stated, at the rate
of 1925 per week. Sales are made
only once a month Sometimes the
sales are of more money than is in
the treasury. The banks anticipate the
collections, by loaning on the associations
note. When money has been accumulated
or borrowed from the banks for use, 1T is
put ND at auction; and the man who pays
the largest premium or bonus for it takes
IL, The bonus has run as high as $34 per
share. The average is about $50 per share.
This money goes into the associations
treasury, and each share is profited by it.
1t is as if SO much had been paid in by the
owners of the shares upon them. So, when
borrowers pay interest, that goes into the
common treasury, and is as if SO much
money had been paid in by the owners of
shares on account of them. Thus it is that
the time within which share, on which %
cents weekly is paid, becomes worth 5000,
is reduced from sixteen years to about
eleven.
By way of illustration. A man owns Is
shares ia one of the associations. That
gives him the right to bid on loan of
%0,UuU. he pays MS DOnuS OF p0OU OF 9oUU
bidden at the auction, and spends the bal
ance on his house. He keeps on paying
on his shares, of course; the association
keeps on making bonuses at sales, and col
cling interest; and at the end of eleven
years he finds that his shares have got'to
be worth So, 600, and that he has his house
free and clear. He pays six per cert in
terest ON his loan; but each payment made
by himself or by the association on his
shares is deducted from the principal on
which interest runs; and really the average
rate of interest is something less than five
per cent He pays 1926 bonus on the
SIS, 900 loan; he will in IL years have paid
So, SIS on account of his shares, and 50, $50
Interest," total of $3.50. He has his
SIS, 600 house out of it, and has paid in ad-
dition only $3.50 for IL years house rent.
He could not have hired the same house for